Elon Musk's artificial intelligence venture, xAI, is reportedly in advanced discussions to raise \$15 billion in equity funding, potentially valuing the company at a staggering \$230 billion. This represents a significant increase from the \$113 billion valuation disclosed in March 2025 after xAI acquired the social media platform X.
The potential funding round, details of which were reportedly shared with investors by Musk's wealth manager Jared Birchall, aims to fuel xAI's ambitious expansion plans in the competitive AI landscape. The company is investing heavily in expanding its data center capacity to train more advanced AI models, seeking to rival the capabilities of OpenAI's ChatGPT and Anthropic's Claude.
A significant portion of the raised capital is expected to be allocated to acquiring graphic processing units (GPUs), which are essential for training large language models. These models are the foundation for advanced AI systems like xAI's chatbot, Grok.
In addition to securing funding, xAI is actively expanding its infrastructure. The company is investing heavily in building its planned Colossus supercomputer in Memphis, Tennessee, having acquired a 1-million-square-foot property for the project earlier in 2025.
Further solidifying its infrastructure, xAI is partnering with Saudi Arabia's state-backed AI venture, Humain, to construct a massive 500-megawatt data center in the kingdom. This data center, powered by Nvidia chips, marks one of the largest Saudi investments in AI infrastructure to date, underscoring Riyadh's ambition to become a global AI hub. Musk revealed the initiative at a US–Saudi investment forum in Washington, D.C., alongside Nvidia CEO Jensen Huang.
The flurry of activity follows xAI's earlier funding rounds, including a \$6 billion Series C round in December 2024 with participation from investors like Andreessen Horowitz, BlackRock, Fidelity, Sequoia Capital, Nvidia and AMD. In July 2025, Morgan Stanley announced they had raised \$5 billion in debt for xAI and that xAI had separately raised \$5 billion in equity. SpaceX, another Musk venture, invested \$2 billion in xAI as part of the equity raise.
Despite the positive momentum, xAI has faced some challenges. Musk has previously dismissed reports about the funding round as "false". Additionally, the company recently laid off 500 data annotation workers, signaling a shift in operational focus. There have also been reports of several senior executives leaving the company.
The AI landscape remains intensely competitive, with investor enthusiasm high despite emerging fears of an AI bubble. xAI is positioning itself as a key player, driven by its access to capital, strategic partnerships, and Musk's vision to "understand the true nature of the universe". According to Forbes, xAI is projected to be cash flow positive in approximately two and a half to three years.
